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Full text of "Ten Steps to Selling Your Timber"

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Prepared by Joe McNeel 
Extension Timber Harvesting Specialist 

Standing timber is a valuable commodity that can bring the owner a 
handsome return — assuming that he or she knows all the steps involved 
with marketing that timber. This ten-step guide, if followed, can help 
you obtain a fair market value for your timber. 

Step 1: Before anything else, consider the factors that 
mil affect the sale of your timber. 

Can you sell your timber? Are there liens or other encumberances on 
the property that would hold up a timber sale? Be sure that you have the 
right to sell your standing timber before making any other plans. 

Do you have a good reason for selling your timber? Some owners sell 
timber based on a prescribed management plan. Others sell to salvage 
damaged timber or make the land available for real estate development 
or farming. Many landowners sell timber simply because they need 
money. Whatever the reason for selling, make sure that it is based on 
your objectives and not those of the timber buyer. 

Is the timber marketable? The type and quality of your standing 
timber will largely determine its marketability and value. A mature pine 
stand with good growth characteristics is a marketable and valuable com- 
modity. In contrast, poor-quality hardwood stands have little value and, 
in some cases, cannot be sold for any price. 

Standing timber, or stumpage, value varies based on the type of timber 
products contained in that stumpage. Common products include 
pulpwood, chip'n'saw and sawtimber. Pulpwood-sized timber usually 
ranges from six to nine inches in diameter at breast height (DBH) and is 
the raw material for paper manufacture. Chip'n'saw timber typically 
ranges from 10 to 12 inches DBH and is manufactured into lumber and 
wood chips for paper making. Sawtimber, where the trees are at least 12 
inches DBH or larger, is marketed for lumber manufacture. 

A young pine stand, say 18 to 20 years old, is typically marketed for 
pulpwood. Timber removed at this age is typically sold as pulpwood. As 
a stand gets older the timber can be sold to other markets. Chip'n'saw 
markets are sometimes available for stumpage that is larger than 
pulpwood size, but smaller than sawtimber size. Stumpage sold as 
chip'n'saw brings more money than pulpwood. However, there are some 
areas of Georgia where chipVsaw markets do not exist. Larger-sized 
timber can usually be marketed as sawtimber or plywood veneer stum- 
page. These products are usually more valuable than chip'n'saw or 

2 - 

pulpwood. Markets also exist in some parts of the state for poles, posts, 
whole tree chips and fuelwood. In marketing your timber, be aware of all 
the available markets. 

What are the current market conditions for stumpage in your area? An 
advantage of owning standing timber is the ability to hold off on a sale 
until market conditions are just right. Use this "time aspect' ' to your 
favor. Wait until you can market your timber for a profit. Check the 
market conditions — if the market is bad wait until the situation changes 
for the better before selling. You may want to let your timber grow to a 
more valuable size. Finally, try not to let financial difficulties force you 
into a sale. Timing is one of the most important factors in making a good 
sale. It's better to pick the right time to sell and get the most money. Plan 
your sale well in advance to avoid last minute problems. 

Step 2: Determine the type of harvest you want to conduct. 

The most common type of timber harvest in Georgia is the clearcut, 
where all the merchantable timber in a tract is harvested. Other methods, 
such as a seed- tree or shelterwood cut, involve saving a predetermined 
number of trees per acre as a seed source. Another type of harvest sale is 
the thinning, where a certain number of trees are removed from the stand 
to allow remaining trees more room to grow. 

The clearcut involves the least physical preparation — marking the 
boundary and inventorying the stumpage for sale. Clearcut harvests will 
typically provide the landowner with more per unit value (dollars per 
cord or MBF) than other harvests because the logger is not required to 
leave trees on the site and can harvest the timber more rapidly. Sites that 
have been clearcut are most often replanted in pine, either by machine or 
by hand. Site preparation may be required prior to planting and a por- 
tion of the timber sale earnings should be set aside for reforestation. 

Seed tree and shelterwood harvests are somewhat more difficult to set 
up, but have the advantage of low cost regeneration of the subsequent 
stand. In both systems, trees to be left for seed after harvest are selected 
and marked, the timber volume that will be cut is estimated and the 
boundaries marked prior to the sale. Many landowners hire a consulting 
forester to mark the stand, tally the sale timber and run the boundaries. 
However, these services may be more expensive than those on a clearcut 
sale. The landowner may receive less per unit (dollars per cord or MBF) 
and will receive less overall on these harvests. 

There is also risk of damage to the seed trees left on site by logging 
equipment, disease, insect attack and windthrow. Close scrutiny of the 
logging operation can prevent heavy damage to the seed trees. 

Finally, the seed producing trees must be removed after a young stand 
has been established on the site. If too few trees have been left per acre, 
they will probably not bring their market value when sold because of the 
small volume harvested per acre. This disadvantage is not apparent with 
the shelterwood system, where more residual trees are left to grow larger 
while they reseed the tract. 

- 3 

Thinnings are partial harvests made when the stand is still young, 
usually between 15 and 25 years old and when the removed timber can be 
marketed as pulpwood or chip'n'saw. Thinnings are similar in set up to 
the seed tree and shelterwood harvests where poor quality timber (i.e., 
suppressed, diseased and deformed timber) is marked for removal and 
tallied for inventory purposes. However, thinning only removes a por- 
tion of the stand and will provide less revenue than a complete harvest. 
The primary purpose of thinning is not to make money, but to allow 
more room in the stand for the better trees to grow. 

If you are unsure as to how the stand should be harvested or what type 
of reforestation method is appropriate, ask a professional forester or 
your county Extension agent for his or her advice. 

Step 3: Establish the tract boundaries and the acreage 
involved in the proposed sale. 

In any sale where you want a certain stand to be harvested or thinned, 
you will want to mark the area to be cut. Start with a detailed description 
of the tract boundaries. Property lines and an estimate of the tract 
acreage can usually be obtained from county records. Once you have 
established the boundary on paper, clear and mark boundary lines on the 
tract to make them visible to prospective bidders and the logger who will 
eventually harvest the timber. Boundary surveys or resurveys should be 
done by a registered surveyor. 

You should also prepare a map of the tract with the boundary line 
directions and distances provided. The map should also include access 
roads, features that affect harvest operations (e.g. fences, wet areas, 
streams) and the distance to nearby towns. Potential buyers can use this 
map as a reference when bidding for the sale and to guide logging opera- 
tions after the sale. 

Step 4: Inventory the products and volume of timber for 

It is very important that you get a good inventory of the timber volume 
on the tract before advertising the sale. Timber inventory estimates are 
based on samples of the standing timber on the tract. The process of 
sampling is called a timber * 'cruise". Sampling in a cruise can include all 
the trees being offered for sale (100 percent cruise) or some represen- 
tative number of trees. A 100 percent cruise is often used for sawtimber 
or veneer sales where each tree is valuable. In pulpwood sales, where in- 
dividual trees have less value, a representative number of sample plots is 
usually adequate. 

The person cruising the tract measures the diameter at breast height 
(the diameter of the tree 4.5 feet from the groundline) and the merchan- 
table height of the sample trees on each plot. Volume estimates are com- 
puted for the sample trees using the diameter and height measurements. 

- 4 - 

Total tract volume is calculated by expanding the sample data statistical- 
ly to estimate the volume per acre and then multiplied by the number of 
acres on the tract. Good estimates are commonly within 5 to 10 percent 
of the actual volumes harvested. 

You will probably want to have a consulting forester work up a cruise 
for the tract because of the complexity involved in cruising timber. Any 
inventory report provided by the consultant should include a table sum- 
marizing the total number of trees on the tract by species, diameter, 
height and product class. If the tract is broken up into smaller lots, each 
lot should have a separate table detailing this information. A table of this 
type is commonly called a "stand and stock'* table (See Table 1). Make 
sure the report takes into account all the available market categories — 
including pulpwood, chip'n'saw, and saw logs. You can also request a 
value appraisal based on the cruise information to help you establish a 
minimum tract (or per acre) value for later bidding purposes (Step 8 pro- 
vides more information on bidding). 

Table 1: Sample stand and stock tables. 

Species: Loblolly Pine 
Product: Pulpwood 



Number of Trees by 
Merchantable Height (feet) 

25 30 35 40 45 50 








































**Trees over 30 ft. can be classed as chip'n'saw product. 
Total chip'n'saw volume on tract = 87.6 cds 

Species: Loblolly Pine 
Product: Sawtimber 


Number of Trees by 
Merchantable Height (16 ft logs) 

1.5 2 2.5 3 3.5 








































5 - 

Step 5: Select the type of sale to specify in the contract. 

Standing timber can be sold in several ways, although the lump sum 
-and scale sales are used most often. Landowners should be aware of the 
advantages and disadvantages of these two sales methods. 

Lump sum sales are set up so that the seller is paid a fixed amount 
(lump sum) for the designated timber. While buyers base their bids on an 
estimate of the volume to be harvested, the total dollar amount the seller 
receives is independent of the amount actually harvested. Landowners 
prefer these sales because they relieve them of the burden of keeping 
track of the volume of timber being harvested. 

Timber sold on a scale basis is sold by the unit (ie; cord, MBF, etc.) at 
a unit price agreed upon prior to the harvest. As timber is harvested off 
the tract, payments are made to the seller based on the contract price and 
on a tally of the harvested timber. This sales method is more difficult to 
administer than the lump sum sale, because problems can arise in obtain- 
ing an accurate harvest tally. Such problems have prompted two Georgia 
laws which give some protection to the landowner. The first law requires 
the buyer to provide the seller with a price quotation calculated in dollars 
per thousand pounds when weight is used as a basis to determine cords, 
board feet, etc. The second law requires that the buyer provide the land- 
owner with a scale ticket for each and every load of logs removed from 
the property. Even with these two laws, the burden of keeping track of 
timber removals is still largely on the landowner. 

Revenues from timber sales may be eligible for capital gains treatment 
under current federal income tax laws. Eligibility provisions for lump 
sum sales and scale sales differ substantially. Thus, tax laws may weigh 
more heavily than any other factor in the decision to use one method 
over the other. Consequently, the landowner should review current 
timber tax laws before initiating any sale. Information regarding current 
tax laws applicable to timber sales can be obtained through your local 
county Extension agent or through the Internal Revenue Service offices 
in your area. 

Step 6: Draw up an invitation to bid on the timber. 

An invitation to bid on the timber should be put together and sent out 
to all potential bidders for most timber sales. The sealed bid sale is a 
good way to get fair market value for your timber — if you have con- 
tacted all the right people and given them the right type of information. 

The invitation should include the seller's name, address and phone 
number and the times that he or she can be reached at that location. Give 
a legal description of the tract, its boundaries and its location. Include a 
well-made map of the tract. Detail the type of harvest you have decided 
to use, e.g. clearcut, shelterwood or seed tree cut. Provide a summary of 
the volume estimates by species and product and indicate that the quoted 
volume is an estimate — not a guarantee of the existing volume. Specify 
the date you want to enter into a contract and the length of time available 
for the buyer to harvest the timber. 

- 6 - 

Spell out all the harvesting restrictions you plan to include in the con- 
tract to make sure that the buyer is aware of them. Specify the conditions 
required before you will accept a bid and include a statement affirming 
your right to refuse any and all bids. Detail the payment schedule you 
want to set up, such as split payments over the harvesting period. Finally, 
tell when, where and at what time you will open the bids, since many bid- 
ders will want to be present at the bid opening. Be sure to include any 
other documentation that might prove helpful in supporting your infor- 

A sample timber sale bid invitation is included in this publication for 
you to use as a guide in preparing bid invitations. 

Step 7: Send the bid invitations out to potential buyers. 

Bid invitations are successful in attracting buyers only when the invita- 
tions reach the right people. Most consultants know the buyers in a 
region and will, as a matter of course, send the bid invitations out to 
these people. A landowner, on the other hand, may know only a few 
buyers. In this instance, the consultant is usually more knowledgeable. 

Should you decide to send out the bids without the services of a con- 
sulting forester, there are several sources available that you can use to 
locate timber buyers. One is the "Directory of Wood Using Industries' ' 
available from the Georgia Forestry Commission. Another source is your 
county Extension agent, who generally keeps up on timber sales in the 
county. In some cases, advertising the sale in a newspaper will bring a 
good response. The Georgia Department of Agriculture also provides a 
free advertising service in the "Market Bulletin" for landowners in- 
terested in marketing their own timber. 

As bids come in, keep them in strict confidence; that is, unopened. 
Don't use a bid to gain leverage with another buyer. This will get you a 
bad reputation and will probably produce bad feelings among the other 
bidders. If this happens, the bidders may choose to withdraw their bids 
and refuse to deal with you in any future timber sales. 

Step 8: Select the best bid. 

Although this step would seem the most enjoyable, it has its pitfalls. 
Be sure you have a good idea of how much your tract of timber is actual- 
ly worth. At least, be familiar with the average prices for stumpage in 
your part of the state. If the bids seem too low, you may want to reject all 
of them and wait for better sales conditions. One way of handling this is 
to include your minimum acceptable offer in a sealed envelope along 
with the other bids and open it only if the minimum is not reached. 

You will also want to get to know a little about the prospective bid- 
ders. The high bidder may have a bad business reputation or be known 
for poor logging practices. In that case, you may want to reject the high 
bid in favor of a lower bid from a more reputable buyer. 

Be sure you notify all bidders of the results, even if they do not attend 
the bid opening. You should contact those not present about the results 
as soon as possible after the bid opening date. 

Step 9: Enter into a contract with the selected bidder. 

When entering into a timber sale agreement, be sure to document the 
agreement and all the particulars associated with the sale. It is necessary 
to have a sales agreement if you are required to make any legal claim 
against the buyer at any time during or after the harvest. A contract is 
also necessary to qualify your timber sale earnings for capital gains treat- 
ment. You may want to localize the contract to take into account specific 
problems or conditions in your area. 

As with most legal forms, the best person to write the sales agreement 
up is not the landowner. You should get the help of a competent lawyer 
who is versed in timber sales agreements. If your lawyer is unfamiliar 
with what goes into a timber sales agreement, Extension publication 
C773, "Sample Timber Sale Contract," can be used as a reference. 

Step 10: Periodically check the tract during the harvest. 

You will never know if the logger has cut down all those trees you 
wanted left standing unless you visit the operation. Check to see if the 
tract boundaries are being maintained and that the residual trees (if you 
choose to leave any) are left standing and inunjured. Check for site 
damage, like excessive rutting of skid trails and haul roads. If you plan to 
replant the timber, be sure to have the stumps cut low to the ground dur- 
ing the harvest to facilitate later site preparation work. Finally check that 
any fences, culverts, and roads are left in good condition — at least com- 
parable to their condition prior to the harvest. 

Sample Timber Sale 
Bid Invitation 

November 17, 19. 

Sealed bids will be received for all the merchantable timber on the pro- 
perty of Jim Smith. The tract is approximately 100 acres in size and con- 
tains the following timber volumes: 










Trees MBF 

Loblolly Pine 





4079 243 





98 5 





28 2 





103 6 

Totals 24092 2195 8896 759 4308 256 

t Pulpwood and chip'n'saw volumes taken to a 4 inch top diameter - sawlogs 

to a 6 inch top. 
* Sawtimber volume based on Scribner Scale. 

These figures are representative estimates and should be verified by in- 
terested parties prior to bidding. The tract may be viewed upon request 
by contacting Jim Smith at 555-3418 or -3419 between the hours of 9 
a.m. and 4 p.m., Monday through Friday, and arranging a tour of the 

A legal description of the tract, taken from Page 103, Deed Book 189 
at the Tift County Clerk's Office, follows: 

Beginning at an iron stake at the corner of the intersection of the Ir- 
winville road with the Moultrie Highway and extending 2053.4 feet 
due West to a mound of rocks, thence North 5 degrees, 16 minutes 
East for a Distance of 2156.3 feet to an iron stake, thence South 85 
degrees, 12 minutes East for a distance of 2023.1 feet to an old oak 
tree with three slashes, and thence due South for 1964.4 feet to the 
point of beginning and containing 100 acres, more or less. 

The successful bidder will be required to complete the harvest within 
24 months of the signing of the sale contract. The seller reserves the right 
to visit the tract at any time during the harvest without notification. All 
haul roads will be graded and ditched with culverts placed where needed 
to minimize erosion. All unmerchantable stems on the tract will be 
knocked down or felled prior to completion of the harvest. 

Submitted bids will be opened at 1 p.m. on Thursday, December 12, 
1986 on the front steps of the Tift County Courthouse in Tifton, Ga. 
Bids should be returned to the following address no later than December 
5 to insure receipt of the bid: 

- 9 - 

Jim Smith Timber Sale 
P.O. Box 1209 
Tifton, Ga. 31793 

Bids received after 1 p.m. on December 12 will not be considered. 
Telephone notification of a successful bid will be tendered within 12 
hours and written notification will be provided within five working days. 
The seller reserves the right to refuse any and all bids. 

A certified check made payable to Jim Smith in the amount of 
$1000.00 must be received by Mr. Smith or his representative within 24 
hours of notification of a successful bid. The deposit will be held in lieu 
of a performance bond until completed performance of all terms, provi- 
sions, conditions and obligations of the contrct are observed. If the 
deposit is not received within the specified period, bidding will be 
reopened and another offer will be selected. Unsuccessful bidders will be 
notified immediately after the deposit has been received. 

Total payment by the successful bidder will be made to Jim Smith by 
cash or cashier's check within thirty days after the bid has been selected. 
If the money is not received, the bid becomes void, the deposit is 
forfeited and the next highest bid will be considered. 

A map and blank timber sale bid are enclosed for your review. 

Timber Sale Bid Form 

bid the following amount for the standing 

(Name of Bidder) 

timber on the tract that was advertised by 

(Name of Landowner) 

with bids opened at on 

(Agent for Seller) (Time) (Date) 

at , 

(Address of site where bids will be opened) 

(Town) (State) 


(Dollar Amount) (Spell out dollar amount) 

It is understood that the purchaser will have ( ) 

(months) (Spell out) 

months to complete the harvest and remove all merchantable timber. It is 
further understood that the volume estimates enclosed are not 
guaranteed by the seller. Note is also made of the fact that the seller has 
the right to refuse any and all bids. 

Date: Bidder's Name: 


10 - 


, III 

3 eioa amm*] 3Mla 

Rough Map of Jim Smith Tract 
Containing 100 Acres (Approximate) 



o< "Roco 

20 2.3. 1 £ee-\ 



.9 s . ' 


2053.4 fce-t 

?^ou\\«"»t. Hv^Uy^ 








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December 1985 

Issued in furtherance of Cooperative Extension work, Acts of May 8 and 
June 30, 1914, The University of Georgia College of Agriculture and the 
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Tal C. Duvall, Director 

Cost: $1,000.00 / Quantity: 6,500